Time to Make Hard Choices on the Budget


The Center on Budget and Policy Priorities has made some splashes with this graph.  I find this strangely unconvincing as a policy argument for anything.

For starters, the 0.7% of GDP that it covers only matches the shortfall for a brief period, at least according to the Social Security Trustees report.  By the middle-to-late twenties, the shortfall is more than twice the amount of the Bush tax cuts on the rich.  Even if we hadn't already (hopefully) earmarked this money for something else, this would be at best a stopgap measure; the program would rapidly begin putting more pressure on the budge

But I can't even make those numbers add up over the short term.  By the admittedly ham fisted method of dividing the roughly $700 billion the CBO said that extending the Bush tax cuts for the rich would cost, by the $190 trillion worth of GDP that the CBO projects over the next ten years, I get 0.36% of GDP, not 0.7%.  The CBO's numbers don't seem to be increasing much beyond the rate of inflation towards the end of the forecast period, so I find it hard to reconcile their numbers with the CBPPs even by extending out the forecast period.  And for all my skepticism of the accuracy of CBO forecasts, I am apt to trust them over a think tank with a decided ideological tilt (in either direction).

What worries me is that I'm seeing these sort of comparisons a lot these days from Democrats.  They seem to plan on "paying" for seventeen different programs with the same pot of money.  For example, it now appears to be administration policy to claim that health care reform has extended the solvency of Medicare, and has also reduced the budget deficit, which the CBO has said isn't true.   If you want to say you extended the life of the Medicare trust fund, then you have to also note that you opened up a $200 billion annual hole in the general fund.

Similarly, while it is perhaps true that you could "pay for" the Social Security shortfall by rescinding the Bush tax cuts on the rich, that would leave a gaping budget deficit that would then have to be paid for in some other way.  This is effectively exactly the same thing as, say, funding the Social Security shortfall with a massive new tax increase on someone else.  In the face of the sizeable deficits we are projecting into the foreseeable future even after all the Bush tax cuts expire (not just the ones on the wealthy), the "point" made by this chart seems kind of actively misleading--especially for an organization that has spent the last decade criticizing Bush for the effect his tax cuts have had on the deficit.  The CBPP is right to complain about Republicans arguing that extending the tax cuts is fiscally responsible; it isn't. But publishing a graph like this seems to simply urge the same fiscal irresponsibility, in the opposite direction:  avoiding the unpleasant process of controlling our spending.

Liberals are right in one complaint:  we don't have a social security trust fund problem, we have a general fund problem.  Whether or not the trust fund is "broke" is irrelevant; the question is, can we afford this program?

The problem is, it's a big, honking expensive program.  And so are a bunch of other things liberals want to do, like universal pre-K and more money for schools, health care, green jobs, and so forth.  You can probably do any of these things.  But you can't do all of them, so the endless comparisons of the cost of a program to the same few sources of revenue are not helpful.  Either find a new source of revenue, or pick which things you're going to pay for--including the deficit.